CIA, VCs invest in packet-processing chip startup

SANTA CLARA, Calif.--The Central Intelligence Agency and others have invested $10 million in Bay Microsystems Inc., a developer of packet processing and traffic management chips.

Bay has closed $10 million in a Series C financing round, bringing the total investment in the company to more than $30 million. Investors in this financing round include a new institutional investor, In-Q-Tel, as well as participation from existing institutional investors: Selby Venture Partners, Needham Capital, Thomas Weisel Venture Partners, and Alliance Venture Management.

In-Q-Tel, founded in 1999, is a private, independent enterprise funded by the Central Intelligence Agency. In-Q-Tel's mission is to identify and invest in companies developing cutting-edge information technologies that serve U.S. national security interests.